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Retirement Plans Newsletter July 9, 2019 |
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Webcasts, Conferences IRA Beneficiary Distributions - Part 1
Partnerships and LLCs: Understanding the Unique Rules
Distributions Following Death: Deceased Participant Issues
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Guidance Overview]
The QPAM Exemption: Watch Out for Affiliates Convicted of Crimes Outside the U.S. "Recently, the [DOL granted] Individual Exemptions to BNP Paribus and UBS AG, allowing them to continue managing assets of ERISA Plans in reliance on the QPAM Exemption despite the criminal convictions of affiliates outside the United States. However, unlike the individual prohibited transaction exemptions granted ... in the past for similar foreign convictions ... the Department attached several new restrictions and requirements in the Individual Exemptions."
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![Sponsored by International Foundation of Employee Benefit Plans [IFEBP]](https://benefitslink.com/bnrs/2017/ISCEBS_Symposium19_top.png "Sponsored by International Foundation of Employee Benefit Plans [IFEBP]")
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[Guidance Overview]
Rhode Island Now Requiring Financial Information from Church DB Plans with 200 or More Members "The language of the statute raises a number of practical and jurisdictional questions. For example, do the plan sponsor or the plan administrator need to be located in the State of Rhode Island? Do the plan members need to be in the State to count towards the 200-member threshold, or to be required to be provided notice? And if so, how does the plan determine if a member is a resident of the State? Further, do the notices need to be compiled under ERISA actuarial assumptions?"
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New IRS Guidance on Multiple-Employer 401(k) Plans "[U]nder the proposed regulation a defined contribution MEP could be eligible for an exception to the unified plan rule. The exception ... would allow the MEP administrator to take unilateral action to deal with participating employers that either fails to satisfy a qualification requirement or is unresponsive to requests for information.... However, the spinoff process is not as easy as throwing away a real bad apple."
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A Bad Apple a Day Still Keeps the MEP Away "[The proposed regs] create a method ... to limit repercussions for a compliance failure to just the adopting employer responsible for the failure without exposing the rest of the plan.... The MEP operator must provide an unresponsive, non-compliant participating employer with a series of notices over a period of up to two years. If the offending employer still does not take the necessary corrective action, its portion of the plan is automatically spun-off and terminated. But ... there is more to it than just that."
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Considering Both Ethical and Practical Concerns in Managing Retirement Plan Benefits "More organizations are starting to understand firsthand that employees' financial insecurity strongly contributes to anxiety that can reduce productivity.... [Employers] see greater value in reducing stress on the job to support both productivity and on-time retirement. Helping employees retire on time is a bedrock component of the social contract between employers and their workforce -- and serves the financial interests and future opportunities of both."
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[Advert.]
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"GAO was asked to examine [1] DOL's process for granting exemptions for prohibited IRA transactions and outcomes of that process, and [2] the extent to which DOL and IRS collaborate on oversight of prohibited transaction rules for IRAs.... GAO is recommending that DOL and IRS establish a formal means ... to collaborate on oversight of prohibited IRA transaction exemptions. GAO is also recommending that DOL document policies and procedures for managing the exemptions process." [GAO-19-495, pub. Jun. 7, 2019, released Jul. 8, 2019]
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On the Design of Mandatory Pension Programs Around the World "When the individual is rational and has access to the same investment opportunities as the pension fund, ... typical pension scheme designs substantially reduce welfare ... However, ... a well-designed mandatory pension plan can substantially improve the welfare of individuals who either do not privately invest in stocks at all or only in an undiversified stock portfolio, or who procrastinate on retirement savings."
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Final Report on Connecticut Pension Sustainability (PDF) 736 pages; Jun. 27, 2019. "[It] may be feasible for the state to establish a mechanism to identify and transfer state assets into a trust for the sole benefit of the state's pension funds ... The Commission recommends that the legislature provide specific policy guidelines before specific assets are considered for potential contribution to a trust mechanism ... [U]sing the proceeds of the Connecticut Lottery for the benefit of the pension funds or the wholesale transfer of the Connecticut Lottery, as an asset to the funds, is technically feasible."
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Does 'Fiduciary' Matter Anymore? "[A]ccording to Google Trends, searches on the term 'fiduciary' spiked to their highest levels the first week of February, 2017.... What might explain the apparently ebbing interest in 'fiduciary' over the last couple of years? Certainly, oversaturation could be cited as one reason.... It may be that it has now become mainstream, second-nature in fact."
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Benefits in General |
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"[J]ust 11% of employees name the Internet as the place they turn to learn about benefits at enrollment season each year. That number falls to just 10% of Millennials and 7% of Generation Z workers."
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Benefit and Compensation Issues in Employment and Separation Agreements "[1] Salary continuation and Code Section 409A ... [2] Release timing and Code Section 409A ... [3] Changes to employment agreements and Code Section 409A ... [4] Compensation and constructive receipt Issues ... [5] Taxability of non-cash benefits ... [6] Drafting COBRA language ... [7] Paying for COBRA coverage ... [8] Employment through bonus payment date ... [9] 401(k) deferrals and severance pay ... [10] Equity awards."
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Executive Compensation |
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"ISS and other 'ESG-only' ratings firms have published their expectations for ESG and, generally, focus on two things: [1] substantive actions and [2] disclosure. Thus, it is not difficult to prepare a list of what actions can improve a company's ESG score -- and what actions (or omissions) reduce a company's score ... Some action items are straightforward, even for non-expert compensation lawyers."
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Are You Using the Correct Severance Agreements? "The question is whether the agreement is enforceable, avoids litigation and fulfills the company's goals. If not, the company just gave the former employee just enough money to engage an attorney on retainer and fund a lawsuit."
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Selected Discussions |
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TPA or Plan Sponsor -- Which One Responds to Employee Requests? Assume a plan participant (active, or terminated employee) requests information regarding a qualified DC Plan that a company sponsors. [1] Who is required to provide the information, the TPA or the plan sponsor/administrator (i.e., the TPA's client)? [2] Is the TPA prohibited from providing any information because the TPA is not the sponsor/administrator?
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Multiple Employer Plan: Spin-off and Terminate, or Transfer Assets? Company A is buying Company B in a stock transaction. Company B participates in a multiple employer 401(k) plan. In drafting the merger agreement, Company A wants to take on as little liability as possible associated with B's participation in the multiple employer 401(k) pre-merger. Does a transfer of assets into Company A's plan create any more liability for Company A (related to the plan pre-merger) than if Company B's assets were spun off and that plan terminated?
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Plan Amendment Effective, but Adopted Late Plan was amended effective Jan. 1, 2018 and plan was operated in accordance with these amendments. For some reason, the actual amendment was signed and adopted until April 2019. Is there an issue and if so how is it corrected?
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Processing of a VCP Submission: How Long Does It Take? Does anyone know how long it generally takes the IRS to respond to a VCP submission? We sent it in back in January and the check was cashed, but we haven't gotten any actual response. Is there a phone number we can call to see the status?
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Press Releases |
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PSCA Kicks Off 401(k)/403(b) Day Prep With New Campaign
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Most Popular Items in the Previous Issue |
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One Bad Apple Won't Spoil the Pie: New MEP Rules Proposed
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2019 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.
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